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Faked Out
Plainview, NY--They say you can't judge a book by its cover; likewise
you can't always understand a document by its title.
Asked to handle a sale of this home, First American's agent turned
up a federal tax lien against the sellers (and the property) in
the amount of $84,504.
But the sellers assured the agent the lien
had been taken care of. As proof, they produced a bad copy
of an IRS form titled "Release of Levy," describing
the property and duly signed by an IRS agent.
So the agent closed without taking an exception for the tax
lien in the new owners' title policy.
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Real Useless -- The release
was real, but not all it was represented to be. |
It turned out the departing sellers had taken care of the tax
lien only in the sense that they had entered into an installment
payment agreement with the IRS. The "Release of Levy"
was nothing more than the IRS's promise to forego collection efforts
so long as the taxpayers made their installment payments.
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Soon after closing the payments stopped, and the IRS threatened
to execute against the property for an unpaid balance of $41,572.
First American paid this amount to get the real thing, an IRS
form titled "Certificate of Release of Federal Tax Lien,"
clearing the lien. |
MORAL: To be relied upon, a release should be full,
final and unconditional.
If a release includes any conditions, or if it recites any understanding
or expectation of the releasing party which is not yet satisfied,
then it will only become effective (if at all) in the future--and
it can't be presently relied on.
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